Checking In: China Sees Rush of Foursquare Imitators

While location-based service provider Foursquare is carving an interesting niche with its social network “check-in” services in the U.S., a motley collection of Chinese companies is rushing to cash in on the same idea with the world’s largest Internet population.

Essentially nonexistent two years ago, China’s location-based services market boasted three to four million active users by the end of the third quarter this year, according to a report from Beijing-based market research firm Analysys International. With the rise of mobile Internet use in China, a number of industry analysts have suggested location-based services could eventually become a massive revenue generator, and there’s no shortage of people hoping to position themselves in case that happens.

According to industry analysts’ calculations, China is already home to more than 30 Foursquare-like location-based service companies, many of which are growing at a decent clip.

One of the first companies to enter the market was Jiepang.com. Launched in May, the start-up is connected to major Chinese social networking platforms such as the Facebook-like Renren and microblogging service Sina Weibo and has so far attracted 250,000 users. “We’re hoping that Jiepang will become an Internet tool that everyone uses,” Mr. Liu tells China Real Time. “The ultimate user desire is to share with friends. That’s the same in the U.S. and China.”

While making headway, start-ups like Jiepang have to contend with a number of big players who’ve decided to enter the market. Those include web portal NetEase, search giant Baidu and Shanda Interactive, the country’s largest online game operator, which last month redesigned its four-month-old subsidiary travel website and gave it a new name—Qieke.com—with an eye to the LBS market.

“Shanda has over 100 million active users, most of them gamers, but they are also common people who hang out and have fun in real life,” say Song Zheng, Qieke.com’s CEO. “Users are out there, and what we need to do is to connect them.”

According to company statistics, Qieke.com boasts 1 million registered users and 100,000 active users.

Foursquare, which launched in March 2009, has more than three million users worldwide. .

As has happened in the U.S., Chinese businesses are trying to take advantage of location-based networks to promote their products. On its debut in May, Jiepang signed a deal with a café chain in Beijing to offer users free coffee the first time they check in at one of the stores. The site has also joined up with more than a thousand group shopping websites to help users enjoy bulk purchase discounts on a variety of goods.

Qieke.com, meanwhile, is cooperating with over 100 brands, including big names like Lenovo, L’Oreal and Starbucks. During certain periods of time, users who check-in at a specific Starbucks location get a free L’Oreal gift bag. Those who check-in at 7 Days, an economy hotel chain, get a free lavatory kit worth of 10 yuan and are entered in a lucky with a chance to win a free room for a night.

Currently, around 18% of China’s estimated 800 million mobile users are using smart phones, a number expected to grow at an annual average rate of 35% in the coming five years, according to a recent report by IIMEDIA.

With the market so new, and the potential for growth so large, Jiepang is optimistic it can hold its own against Baidu and the like. The big companies will almost certainly attract a lot of new users, Jiepang founder Mr. Liu says, “but we do our best to serve the current users and grow with them.”

“It will be relatively easier for big companies to get started due to their large user base and brand names,” says Ren Yanghui, an analyst with Analysys International. “But there is no overwhelming superiority. After all, it’s a new field, and everybody starts fresh.”

Whether big or small, providers of location-based services in China face a number of hurdles, IIMEDIA’s Zhang says, including strict government regulation of online maps and the possibility of licensing requirements. “Another problem will be how to keep users logged in after they get bored with the simple ‘check-in’ trick.”

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